Suppose I sell a call, then the next day it is in-the-money, and suppose the person who bought the option resells it instead of exercising it. Does this mean that I am not obligated to fulfill the obligation to deliver the underlying ? And If I was covered ( took a long position ) during the time I sold the call, that means i will now make even more money from the underlying. eg. sold spt call Eur futures options strike 1.2250 ( went long 1.2230 at the same time since futures was trading at 1.2230 then ) Now , futures is 1.2355 ( +105 ).. but the person who bought the call that I had sold did not exercise it, but instead resold it for his take profit. I was covered when I had sold the option...but since the person who bought it never exersised it 9 but resold it ), So I am now assuming that the long position used to cover the sold call option is not under obligation to be delivered. Am i right ? So that means I can make the 105 pips since I was long @ 1.2230 to begin with when I was long . Am I day dreaming ? elite traders rock
Mate, for your sake, I hope you don't actually trade options! You obviously have absolutely no clue as to how the market functions. But to answer your question, yes you're dreaming! Your counter-party is not the person that bought that call, but the clearing house, which eliminates counter-party risk. Besides, the person that sold "your" call had to sell it to someone, hence you're still under the obligation to deliver! Your obligation disappears only when you close out your call (i.e. buy it back) or if it expires and it is not assigned.
the only time you may not get assigned on a short option position is if the underlying pins at strike.... i believe that any security that closes within 10 cents of stike is automatically exercised... please feel free to correct me if i botched the numbers...